LOS ANGELES, Calif. — An agreement reached between the city and the union representing workers at the Department of Water and Power would save the utility $6.1 billion over three decades, officials announced today.
A 2 percent cost-of-living raise scheduled for Oct. 1 would be postponed until 2016 under the agreement, and changes to the pension tier for new employees are projected to save DWP $41 million over the next four years and $1.87 billion over the next 30 years.
Utility and city officials project the agreement would help control rates for their electricity and water customers.
DWP officials are contemplating rate increases for the next three years.
The agreement would reduce those increases by about 2 percent, they say.
The DWP is a city-owned utility, but is funded through the rates paid by its electricity and water customers. Personnel costs make up more than 20 percent of the DWP’s budget.
The deal announced today still needs to be ratified by members of the International Brotherhood of Electrical Workers, Local 18, which represents about 8,200 DWP employees who make up 92 percent of the utility’s workforce. If union members accept the deal, the DWP board, City Council and mayor must also sign off on it for it to go forward.
Mayor Eric Garcetti, speaking at a City Hall news conference this morning, said the agreement reached Wednesday night “contains tough amendments that we fought for. It will deliver reform, saving ratepayers money through further salary reductions and clearing the way for changes we need in the future.”
“This contract contains no raises for three years,” he said. “The last time DWP workers did not get a raise was 20 years ago.”
Garcetti, who rejected a previous agreement saying it did not go far enough, said the latest pact fulfills his demands for pension reform and allows a way for the mayor and the City Council to engage in ongoing negotiations over potentially costly work rules governing overtime, sick leave, bonuses and other practices.
IBEW’s business manager, Brian D’Arcy, said the agreement was negotiated “with a commitment to create real savings for taxpayers while protecting the interest of working people.”
He called the resulting deal “an important step toward enacting real solutions that save billions of dollars for the city and the ratepayers while ensuring the long term health of the DWP and its health and pension plans.”
The new four-year deal would begin Oct. 1, 2013 and expire Sept. 30, 2017, extending an agreement that had been set to conclude in the fall of 2014.
The delay of a 2 percent cost-of-living raise would save the city $385 million over four years and $3.9 billion over 30 years, officials project. Some of those savings would be put toward paying employee healthcare premium costs, 100 percent of which are picked up by DWP.
Starting salaries would also be reduced for 34 jobs common to those at the city, a move that according to city officials would save the city $15 million over four years and $196 million over 30 years.
An adjusted pension tier would save the utility $41 million over the next for years and $1.87 billion over 30 years.
DWP officials said with a high number of employees expected to retire, the rate of new hires joining the utility will ensure that the savings from the new contract would be maximized.
Other cost savings that would be realized under the agreement would come through changing the policy for contracting out jobs and requiring a doctor’s note for sick leave.
The contract also allows the City Council and mayor to weigh in on future changes to the pension tier, which are set by the Board of Water and Power that oversees the utility.
Settlement talks in a lawsuit over payment of pension costs allowed the city to broach the issue of DWP worker pension terms with IBEW.
With pay for DWP jobs typically higher than that of city jobs, city leaders have for the last 18 months sought a way to close the salary disparity between workers. That disparity has made it difficult for city departments to retain employees who are more eager to transfer to the DWP’s better-paid workforce, officials said.
Unlike DWP workers, city workers have already agreed to furloughs and a delay of cost-of-living raises, while the police union has agreed to a 20 percent reduction to starting salaries for new employees.
Garcetti rejected a previous version of the agreement that was reached following 18 months of talks between city negotiators and union representatives.
After assuming office in July, Garcetti said he worked to get more out of an earlier version of the proposed agreement.
Garcetti said today he was satisfied with the revisions made in the past week. The original proposal reduced starting salaries for 28, instead of 34, job classifications, and the 2016 pay increase would have been allowed to hit a 4 percent ceiling, instead of being locked in at 2 percent.
“I was tough. I drew a line. I said I wanted to end the secret deals, work rules and perks,” he said. “I wanted to make sure that signing this contract will not close the door for further DWP reform.”
Elizabeth Hsing-Huei Chou | City News Service